Appeals court rejects challenge to Trump University settlement

A federal appeals court has upheld the $25 million settlement President Donald Trump agreed to in a bid to resolve long running lawsuits claiming fraud in his Trump University real estate seminar venture.

The 9th Circuit U.S. Court of Appeals rejected a challenge brought by Florida bankruptcy lawyer Sherri Simpson, who said she wanted to take Trump to trial over the $19,000 she paid for classes and a mentorship program.

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Lawyers for Simpson said notices sent to thousands of Trump University participants earlier in the litigation promised the right to opt out of the class-action suits immediately or after any settlement was proposed, but the three-judge appeals court panel disagreed.

"Reading the notice as a whole and in context, we conclude that it promised only one opportunity to opt out," Judge Jacqueline Nguyen wrote, joined by Judges Andrew Hurwitz and Steven Logan. "The correct inquiry here is what an average class member would have understood the notice to guarantee ... and the actions of the class members in this case bolster our conclusion that a reasonable reading of the notice precludes Simpson’s interpretation. Among over eight thousand class members, Simpson is the only one advancing this understanding of the notice."

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In the 21-page opinion, Nguyen noted arguments from the class-action lawyers who pursued the suits that Simpson's objection seems to have developed late in the process and may have been coached by her attorneys. During arguments last November, one of the lawyers for the class charged that there was "a whole political aspect" to Simpson's objection, suggesting she wanted a trial simply to make a spectacle of the fraud allegations against the president.

The appeals court panel indicated that was plausible, but said it wasn't a good argument against her objection.

"Plaintiffs repeatedly characterize Simpson’s argument as 'attorney-manufactured,' The timeline and evolution of her objection support that assertion, but our court would have little work to do without creative arguments 'manufactured' by zealous attorney advocates," Nguyen wrote in a footnote.

The 9th Circuit also upheld the settlement as fair and reasonable, particularly in light of the complexity involved in seeking to take a president-elect to trial on the eve of his inauguration — the posture the cases were in at the time Trump agreed to settle them just a week or so after winning the election.

"Both classes of plaintiffs would have faced significant hurdles had they proceeded to trial, including the difficulty of prevailing in a jury trial against either the President Elect (if the trial had proceeded as scheduled) or the sitting President (if the trial had been postponed, as Defendants requested)," Nguyen wrote. "Under these challenging circumstances, the district court acted well within its discretion by approving the settlement."

The decision clears the way for about 4,000 Trump University participants to receive as much as 90 percent of what they paid, usually between about $1,500 for a seminar up to $35,000 for the top tier mentorship.

Simpson could delay the settlement further through an appeal to a larger set of 9th Circuit judges or to the Supreme Court, but one of her lawyers said Tuesday she is giving up the fight.

"I'm not surprised, but we are disappointed that there will never be a public trial on Trump University and that all of the lurid facts about the fraud won't receive the public hearing they deserve," attorney Gary Friedman said.

Friedman said Simpson's team decided to forego a further appeal so that class members can receive their payments. Lawyers for Trump and his companies had said they would back out of the settlement if Simpson was allowed to proceed with a trial.

Simpson said a Supreme Court petition would have taken months to resolve and en banc review was unlikely to be granted given the unanimous ruling from the three-judge panel. "It was never something we took lightly, holding up everybody's payment," the attorney added.

One of the lawyers who pressed the case over Trump University for years, Jason Forge, said Tuesday that he welcomed the ruling and the relative speediness with which the appeals court acted.

"Thrilled for the students and really grateful the Court recognized the urgency of getting this money to them," Forge said in an email. "Justice expedited is justice extended."

New York Attorney General Eric Schneiderman, whose office will distribute $4 million under the settlement, also welcomed the ruling.

"For years, President Trump refused to compensate the victims of his sham university. His reversal in 2016—and the large-scale settlement that resulted—opened the door for student victims to finally obtain the restitution they deserve," Schneiderman said in a statement. "My office will continue to hold those who commit fraud accountable, no matter how rich or powerful they may be."

An attorney for Trump did not immediately respond to a request for comment.

All three appeals court judges assigned to the case were appointed by President Barack Obama.